Britain Looks to China for Christmas Cheer

Congee and dumplings are on the breakfast menu at enterprising hotels, major London stores have installed Chinese bank card terminals, and Mandarin-speaking staff are on hand to help out with the Christmas shopping.

Britain is courting Chinese travellers not only because they are a rapidly growing market — they made an estimated 70 million overseas trips in 2011, up 20 percent in just a year — but because they are serious shoppers.

Britain could face a damaging multibillion-pound trade war with China and see the roll-out of economically vital 4G mobile internet services derailed if an intelligence report, due to land on David Cameron’s desk within the next two weeks, finds that the UK operations of the Chinese communications giant Huawei represents a threat to the UK’s cyber-security.

Downing Street, according to intelligence sources, is prepared to face a costly trade backlash by Beijing if it opts to blacklist the multinational over allegations that the company has links to the Chinese army and concerns that its equipment could be used for cyber-espionage by the Chinese government. Huawei, though not a high-profile consumer brand in the UK, controls a quarter of the EU’s telecom-equipment market, winning over half of all the contracts for 4G infrastructure technology awarded throughout Europe. The Chinese multinational is also supplying the 4G technology for EE, the company that controls Orange and T-Mobile, and has signed similar deals with O2 and 3UK.

Concerns over the potential for state cyber-espionage involving Huawei has recently seen the US House of Representatives’ intelligence committee recommend that the Shenzhen-based company be restricted from operating on US soil. In Australia it has been excluded from bidding to supply the lucrative national fibre network. A similar move is under consideration by Canada.

Mr Cameron’s pledge in late 2010 to double UK trade to China to £62bn by 2015 means the report’s findings could be a game-changer for Britain’s trade ambitions with the new Chinese leader, Xi Jinping, if Huawei is blacklisted. But if Downing Street were to dismiss publicly US, Canadian and EU concerns as unsubstantiated conspiracy theory, Mr Cameron would leave himself open to the charge of keeping Beijing happy at the expense of UK cyber-security.